On TV, State Farm takes lickin', keeps on tickin'
Kudos to Kathy Fountain of Tampa Bay's Fox 13 WTVT on Tuesday for tackling the announced exit of State Farm from Florida's property insurance market. I was one of four guests on her "Your Turn with Kathy Fountain" show that aired at 12:30 pm today. It's not an easy topic to digest and explore in a show that stops often for ads, but it was a good effort. (Photo courtesy of Fox 13.)
My main argument? State Farm insulated itself in 1998 by creating a "pup" company of State Farm Florida. Ever since, we've been conditioned by State Farm to deal only with State Farm Florida's not-so-deep pockets, rather than the national State Farm corporation's mammoth wealth. (More on this theme in a recent column of mine.) State Farm says they can't charge higher premiums to customers in other states to cover Florida's sins.
Okay, so why hasn't State Farm created "pup" subsidiaries for all 50 of the states in which it operates? Because it wanted to sever its exposure in Florida from its national coffers. Something's rotten in the state of Denmark (and Florida).
A badge of courage also goes to State Farm Florida spokesman Chris Neal, who was a good egg to come on the show and serve as a target for frustration by Floridians who, once again, feel like they are getting the shaft by losing the biggest private insurance company left in the Florida property and casualty market. Most of what was tossed at Neal were softballs.
In the meantime, Florida insurance commissioner Kevin McCarty issued a subpoena requesting State Farm disclose records on its property policyholders' names, addresses, policy types, policy limits and premium information. The request follows up the Office of Insurance Regulation's review of State Farm's withdrawal plan which the insurer submitted to withdraw from the Florida property insurance market.
On Fountain's show, State Farm's Neal argued the insurance company did not want to leave the state (as a property insurer) but it was obligated not to become insolvent. Lynne McChristian of the Insurance Information Institute also defended State Farm as doing the best it can under insurance laws. And she urged State Farm policyholders in the state to start doing their homework in order to find the best substitute insurer. Once the state gives the official okay for State Farm to exit Florida, the insurer will keep its policyholders until renewal time, so there's no need to rush out and get a new homeowners policy tomorrow.
Representing homeowner interests on the Fox TV show was Tampa's Bill Newton, who heads the Florida Consumer Action Network. Newton's pitch: State Farm is being less than candid by saying it's losing big bucks ($20-million a month, the insurer insists) in Florida. Newton (in photo by Lara Cerri of the St. Petersburg Times) held in his hand a copy of today's front page article in the Sarasota Herald-Tribune by reporter Paige St. John that says State Farm racked up billions of dollar in revenues in Florida but could not account for where all that money went. Certainly not all of it went to paying claims, and what was left was still too big to be eaten up by company expenses. Prior to going on-air, State Farm's Neal dismissed the story as less than factual. Judge for yourself. It's an illuminating read to me.
-- Robert Trigaux, Times Business Columnist